Hiring for compliance in a post-Banking Royal Commission World

One of the consistent messages we hear when speaking to compliance managers and compliance officers in banks and financial organisations is that there’s so much focus on compliance right now – with still more regulations to come – that they desperately need external expertise to keep up.

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Unfortunately, there is a skill shortage of professional expertise in this field, meaning their compliance efforts may be hampered without an effective strategy to attract and manage the best compliance talent available.

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Change is coming: How to get ahead of the compliance game

The banking sector is about to enter a much tougher regulatory climate as a result of the current Royal Commission into Banking. Anyone hoping that regulations may be gradually wound back in the future once things cool down may be disappointed. Overseas regulatory trends in the banking and financial services sector mean it’s far more than likely that regulation will only increase in the future, not relax.

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In fact, Australia is behind many other countries in tightening banking regulations. Legislation similar to what is passed in the US and UK usually rolls out across the Asia-Pacific region eventually, with Australia often one of the last to follow.

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However, this also means that Australia can see how other countries have approached changes to banking compliance in similar circumstances, allowing local banks and financial service providers a glimpse of the future that can then be prepared for.

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This means many banks and financial services firms are already scrambling to build teams – some of them consisting of hundreds of people – to either re-evaluate and remediate work done previously or improve their operational risk and compliance framework to prevent anything like this happening again.

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The rules are changing – and the regulators, not just in Australia but globally, are unlikely to be as forgiving as they may have been in the past. Instead, each new layer of regulation and each new policy will need to be rigorously applied: This is the policy – roll it out and make sure you’re fully compliant by these deadlines. And that puts much greater pressure on the banks and financial organisations to build teams capable of achieving these deadlines and ensuring complete compliance in a constantly changing regulatory environment.

For a more detailed analysis of the likely changes local providers can expect following the Royal Commission into Banking, you can read our new white paper, The Royal Commission into Banking: Pre-empting the challenges and opportunities for Australian financial services firms.  written by senior financial services regulatory lawyer Rachel Halpern.

Read it now

The banks already have teams of hundreds, if not thousands, of people within their risk and compliance departments. Yet, whatever these banks and providers previously had in place has obviously not worked, or not been robust enough, to prevent the issues, failures and scandals revealed by the Royal Commission.

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Therefore, there will be an ever-increasing reliance on working with external, objective expertise to provide advisory work and unbiased assessments of existing frameworks, instead of keeping everything in-house where any advice or decision may be influenced or skewed by the very culture that needs to change.

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That might mean going to one of the Big Four accountancy firms (who aren’t without their own controversies), and paying through the nose, or partnering with specialist risk and compliance advisory boutiques. Or, it could mean procuring international talent from countries which are further along this regulatory journey than we are – particularly if they have developed more advanced or niche compliance skill sets as a result.

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Banking and insurance providers are always crying out for international talent – something made easier by sourcing expertise through Expert 360’s on-demand, professional freelance marketplace and management system. There are currently close to 2,000 experts registered with Expert 360 who have worked with global corporates to develop global strategies, policies and frameworks for risk and compliance.

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While traditional recruitment often relies on tapping passive candidates on the shoulder who are most likely already in full time work, sourcing expert contingent expertise through Marketplace means you’re accessing a pool of available talent actively looking for consulting or freelance work.

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Beyond making it easier to find the best talent, wherever they may be, using a platform like Expert 360 can also take a lot of the pain out of managing international talent.

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For example, one of our clients recently had a project in Australia and the ideal person to complete the work was in New Zealand. This could have led to complications around figuring out exchange rates or getting paid via an Aussie bank account and working out how to transfer the funds overseas, and so on. Instead, it’s possible for the freelancer to raise the invoice in New Zealand and the platform manages everything else on their behalf.

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One area where freelance compliance expertise could be particularly valuable is within smaller organisations, where compliance is often one of the last functions to be hired – particularly during a high-growth phase. The big banks and major players have the scale, budgets and resources to build huge teams to tackle some of these problems. However, for smaller companies, their size won’t justify a full-time compliance manager. But, if the Royal Commission shows us anything, compliance is still a crucial part of the business whatever the size. So, the ability to tap into talent on demand, or on an ongoing, part-time consultation basis, may be extremely helpful to these smaller financial organisations.

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Despite the short-term pain of adjusting to a post-Royal Commission banking sector, ultimately, tackling these compliance challenges in the future presents an even bigger opportunity to build a competitive advantage. As many organisations are discovering, retroactively fixing compliance issues is a costly exercise, largely undermining any short-term benefits that might have been gained by cutting corners. Meanwhile, those organisations that embrace greater compliance and transparency – and demonstrate a greater alignment with consumer expectations – are more likely to be rewarded with greater trust and loyalty. When public regard for some professions in the banking and financial services industries can be lower than that of politicians and talk-back radio announcers, hovering just above real estate agents and car salesmen, restoring some of that reputation and trust could become a powerful competitive advantage.

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Key Takeaways

• The Royal Commission into Banking will inevitably lead to a more heavily regulated banking and financial services industry, with a far less forgiving approach to compliance.
• Banks and financial organisations are already undertaking large compliance projects to correct mistakes and prevent future damaging findings. But that means good external expertise is in high demand.
• As many other countries have already implemented more stringent regulation, international talent may offer greater insight and niche specialisation in solving many of the likely compliance challenges the local industry may face.
• Platforms such as Expert 360 make it easier for organisations to source, manage and collaborate with expert talent, including international freelancers.